Call for a Hidden Cash Recall

Too often during election campaigns we are told that services valued in our communities need to be cut or delayed in order to balance the government’s finances.

We are told health services must be trimmed. Despite the appalling suicide rates we are told some mental health services in rural communities are not financially viable. Schools programs and other reforms are not currently financially possible. The list could go on.

A recent Q&A broadcast from Tamworth showed the sad state of rural services and the palpable anger in those communities.

Their city cousins are similarly disgruntled with the “hard choices” we are being asked to make.

There is no doubt a nation must balance its books. It would be foolish to govern without a commitment to maintain some equilibrium between expenses and income.

The budget may be ailing, but there is also evidence of a growing yearning across the nation for leadership and a credible national plan. We should urge our leaders to depart from the traditional electoral refrains and excuses. If we have a national debt problem let’s be creative about other revenue sources.

There may even one relatively easy solution and it involves our large banknotes that have gone M.I.A.

At the risk of being overly simplistic, the war on drugs has been lost. Clearly part of the cause is the incessant demands for those substances. Another credible reason is because dealing in drugs is too financially lucrative.

The lure of money has overwhelmed (at best) and perhaps even corrupted (at worst) our enforcement systems. Our borders are porous. We can’t even keep drugs out of our prisons. What hope is there for limiting their spread in the broader community.

Yet, all the lucre from those sales must be stored somewhere. Are we really serious about trying to crack down on crime or to crack down on tax evasion?

There is no doubt much thought and ingenuity has been expended to devise ways to launder the ill-gotten gain. Off-shore tax havens, front companies and many other manoeuvres have been developed to hide the money trail. Yet, at least part of that trail is hidden in plain sight. It is not a question of the cash we can see. Instead this is all about the cash that has disappeared.

The Bank of England estimates that 75% of their currency is not in circulation and over 50% of their currency may be held overseas. Why?

Why would anyone need to hold physical cash? Why can’t it be declared? Why can’t it be deposited into a bank account, and why would anyone need to keep it off the books’?

The situation is arguably no better in Australia.

There are over 300 million $100 notes in circulation in Australia. Those 30 billion dollars are out there somewhere. The Reserve Bank of Australia’s figures even show there has been an 11% increase in the number of $100 notes ‘in circulation’ since 2011. It seems the word circulation does not accurately describe the nature of their existence.

RBA statistics also show that over two times more $100 notes have been printed than $5 notes. More $100 notes (300 million) have been printed than the combined number of $20 (157 million) and $10 dollar notes (116 million). So, why are $100 notes so elusive?

In this era of online payments, payWave and ubiquitous plastic, few people ever pay large bills in cash. It may have been some time since many of us last used a $100 note or saw one in circulation.

Sure, a few notes and coins come in handy to get a coffee, a cheap lunch, a couple of drinks or other minor expenses. What other uses do they have?

This raises the question of where those missing notes are. Where have they been warehoused? Who has them and is there something they would not like the Australia Tax Office or the police to know about?

What if the government simply declared that our $100 notes were going to be withdrawn from circulation? There could be a six-month phase out period. During that period the notes can be taken to a bank and deposited or exchanged for smaller denomination notes. After that date, the notes would cease to have value.

The ATO may even like to take an active role in the process. The ATO could be informed of the conversion at the local bank branch. The person wanting to take an idle million out from under their mattress could be given ample opportunity to explain to the ATO how their ‘little nest egg’ was accumulated.

Let’s have our political leaders explain the reasons why we could not embark on such a plan. I’d like to understand the valid reasons why our governments tolerate huge chunks of our national currency being hoarded for unknown purposes.

Granted there may be some legitimate reasons why some of this cash is stored and those holding those wads should have nothing to fear from the authorities. They can happily deposit or convert their money.

As for those who will have trouble explaining things to the ATO, well this is merely an opportunity for the nation’s books to be rebalanced.

If we are really serious about recovering drug profits and thwarting tax evasion, then let’s act like it.

There are many communities doing it tougher than they should because our legislators are not genuinely tough on the proceeds of crime.
It is time!

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About Mark Toohey

Mark Toohey is an experienced commercial lawyer who has worked with both major law firms and as general counsel in the media, telecommunications, software and IT industries. He has been a lawyer, company director, marketing director, company secretary and entrepreneur. Mark's commercial experience extends way beyond the theoretical. He has helped launch a number of start-up businesses and his hands on experience was gained from negotiating and documenting deals for a wide variety of business initiatives.

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